You think YOUR business is tough, try
operating in an industry where all your customers are dead. The $11
billion funeral industry includes a figure of 1.9 million burial caskets
alone. (1) Many of the caskets in the U.S. are produced by the Batesville
Casket Company in Batesville, Indiana and York
Group Inc. out of Houston, Texas. Analysts estimate that Batesville's
market share is 45 per cent, with York a distant second with 15 per cent.
With funeral homes typically marking up casket prices by 300% to 500%,
its a major business. (2)

Listen to NPR on consolidation
within the funeral industry. You will need Realplayer to listen.

It may seem odd, but the Batesville Casket
Company, a division of Hillenbrand
Industries Inc., has the same goal of most firms - growth. But
with a relatively stable number of deaths each year (roughly 2.2 million
in the United States) how does a firm in the casket business seek expanding
markets? "We can't grow the market like other industries," says Joe
Weigel, 45, Batesville's director of communications. "And because there's
nothing we can do to increase market demand, it's all about serving our
customers better." (3)

While many might think that the funeral
industry is stable, or even boring, it is actually experiencing rapid change.
Bob Putzier, general manager of Batesville Casket's Tinley Park distribution
center, puts it simply, "A lot of people seem to think that the funeral
industry is staid," he says, "but that's simply not the case. I've been
in this business a long time, and things are constantly changing: The questions
change. The demands change. Customers' needs change." (4)

In addition to caskets, Batesville has
branched out into burial
urns, keepsake urns, momento chests, and more. The objective
is to provide a "personalized funeral" for those who desire a different
kind of funeral experience. Some additional products include:

The stainless steel "Millennium" casket

A biodegradable urn for scatterings at sea,
a rapidly growing trend following the recent funeral of John F. Kennedy,
Jr.

MemorySafe(TM) drawer for Batesville's steel
casket models. This feature, already available and preferred on more than
one-third of Batesville's hardwood caskets, allows family members and other
loved ones to deposit notes and other sentiments.

Alexis and Prescott hardwood casket models
that offer new personalization options, including the MemoryFrame(TM) panel,
which enables family members to display meaningful photographs in a casket's
cap panel. (5)

One of the greatest changes has been peoples'
preferences for customized caskets. In order to meet this demand,
Batesville has had to radically change the way it manufactures and distributes
caskets. In addition to utilizing Just-in-Time (JIT) manufacturing
processes, Batesville owns its entire supply chain, including stamping
plants, casket assembly, and trucks to deliver the product. This
supports the tight integration necessary to provide such a high level of
customer service. With 1600 distinctive green and white trucks,
Batesville operates one of the largest private truck fleets in the world.
(6)

Due to the nature of the service, it is
imperative that custom caskets be delivered promptly. A casket rolls
of the Batesville assembly line every 53 seconds, with virtually all of
them delivered within 24 to 48 hours around the United States and overseas.
Essential to this factor is the Fed-Ex-like hub-and-spoke distribution
network that Batesville uses to deliver its caskets. From five manufacturing
facilities, the caskets are moved to one of seven regional rapid deployment
centers (RDC) around the country. From here, they are delivered to
a network of 81 local customer service centers that are responsible for
distribution to local funeral homes. No customer service center is
farther than 10 hours from a RDC. (7) As a result, 98.5 per cent
of all Batesville's caskets are delivered to funeral directors on time.

With customized caskets making up an increasing
amount of Batesville's orders, they get some unique requests. The
firm offers over 700 different casket designs, in addition to customized
materials and specialized embroidering. To speed delivery, customization
takes place both in the manufacturing plants and the distribution centers.
Each of the seven RDCs has a laser engraving machine to support custom-engraved
casket lids. (8)

The firm offers caskets with a Memorysafe
Drawer that allows mourners to include keepsakes or other memorabilia
to increase the personalization of the funeral service. The company
also publishes a broad line of grief counseling
brochures that it makes available through funeral homes to assist with
the grieving process.

Another innovative service is Batesville's
Living
Memorial Tree Planting Service. When families select a Batesville
product, a tree seedling is planted at a national forest at no extra cost.
In agreement with the United States Department of Agriculture Forest Service,
the program has been responsible for planting more than 7 million trees
and reforesting more than 14,500 acres in the past two decades. It
is now the largest private reforestation project in the United States.
(9)

Batesville offers these services in a surprisingly
"high touch/low tech" way. The firm uses very little computer technology
or automation to assist in the manufacturing process. "If our operation
were highly automated," comments Ken Camp, VP and General Manager of Batesville,
"we could never satisfy the specific needs of our customers. And
we also wouldn't be able to adjust quickly to changes in the market." The
combination allows the flexibility necessary to meet constant changes in
customer preferences. (10)

With a recent change in the law governing
the purchase of caskets, firms such as Batesville face a renewed challenge
from discount casket manufacturers and distributors. Caskets were
usually purchased as part of the funeral package from the funeral director,
often at prices 3 to 5 times the cost. Attempts by discount casket
makers to enter the market were stymied by funeral homes' policies of adding
"handling fees" to caskets purchased outside their operations. A
study in 1996 by the Funeral Directors Association found that the average
cost of a funeral in the United States, for a full service, cost about
$4,622, with caskets representing anywhere from 40 - 50 per cent of the
costs. (11)

To protect grieving families from price
gouging and to eliminate mandatory 'package deal' funerals, in 1994 the
Federal Trade Commission (FTC) revised its 1984 Funeral
Rule. Now funeral homes must provide customers with an itemized list
of prices for all goods and services selected, and they must allow consumers
to provide their own urns or caskets if they choose. The casket "handling
fees" were outlawed. (12)

As a a result of this action, the increase
in discount casket distributors has been significant. You can purchase
a casket online at BuyCaskets.com,
with savings from 20 per cent to 80 per cent off normal retail prices.
(13) Or if you prefer, you can get a set of plans and build a casket
yourself from Rockler Woodworking.
(14) Additional discount casket providers include:

However, Batesville feels that it can meet
the challenge as long as it continues to offer a combination of premium
product and service to its funeral homes. By providing customized
services, Batesville can insulate itself from the low-end providers.
This strategy has proved successful so far, as Batesville enjoys a 40 per
cent market share overall, with as much as 60 per cent of the high-end
casket business. But can Batesville continue to offer new features
to its caskets that effectively differentiate its product from the low-cost
alternatives?